Ireland Looks to Close Loophole Apple Uses to Avoid High Taxes in the US

Ireland may possibly shut down a tax loophole that allowed Apple to avoid declaring itself a tax resident in any country according to The Street. Apple, which currently has multiple subsidiary companies in the Irish city of Cork (Apple Operations International (AOI), Apple Operations Europe, Apple Operations, Apple Sales International and Apple Distribution International), is able to move money around the world without tax penalties because companies managed and controlled abroad but located in Ireland aren’t subjected to taxes. The following was mentioned regarding the matter:

"The second measure to be included in the Finance Bill is a change to our company residence rules aimed at eliminating mismatches – that can exist between tax treaty partners in certain circumstances – being used to allow companies to be ‘stateless’ in terms of their place of tax residence," the country said in a press release on Tuesday.

The Apple Operations International subsidiary has come under scrutiny in the recent months for exploiting the loophole as it has received billions of dollars between 2009 and 2011 but paid no taxes to any government. According to Apple’s own statement on the matter, AOI is incorporated in Ireland and therefore not a tax resident in the United States but as it is controlled via the US, it doesn’t meet the tax resident requirements in Ireland either. According to Reuters, requiring companies to declare a tax residence will have little overall impact on apple, as Ireland will allow companies to choose any country as a tax residence, including zero tax jurisdictions. The following was mentioned regarding the matter:

A spokesman for the Department of Finance declined to explain the change but denied it was due to U.S. pressure.

He added that companies could still nominate any country they liked as their tax residence, including zero tax jurisdictions such as Bermuda - a provision that tax advisers said was unusual internationally.

Apple CEO Tim Cook recently testified in front of the US Senate Permanent Subcommittee of Investigation following an accusation that the company avoided paying billions in federal taxes via “extensive tax-avoidance strategies.” During the hearing, Tim Cook insisted that apple pays all of its taxes. After an investigation of Apple’s finances and disclosure practices concluded in September, the US Securities and Exchange Commission opted not to take any action against the company.

Apple Plans to use its extensive foreign pile of cash to invest abroad, creating additional Apple stores overseas, expanding its iTunes Store, and boosting its international marketing.

It's about time these corporations start paying their dues too. It's too bad that the US government is too corrupt to fix it themselves though. Just goes to show you what it means to fund campaigns.

Apple pays its dues. Apple pays to the IRS what it owes on any amount it makes in the US. AFAIK, Apple pays Ireland what it owes on any amount it makes in Ireland. What is broken is that Apple has to come up with this scheme so that the US doesn't charge Apple for money it makes and keeps in Ireland or anywhere other than the US (though any money made outside the US and brought to the US is certainly taxed).

This just boils down to Irish politicians trying to gain some political capital by "fighting the big bad corporations and making them pay their dues" though in reality not really doing this. As noted by the 2nd article, instead of Apple claiming it has no tax residence (a dumb rule/capability to begin with), Apple will now simply have to claim that it is a tax resident of a tax-free country. As long as it does that, it will rightly avoid unnecessary double taxation of its sales. Irish politicians know that they can't actually make Apple pay taxes on its worldwide (outside of Ireland) profits because Apple would likely rather stop selling altogether in ireland than pay $5B in taxes to Ireland alone.

Now if I'm wrong and it makes Apple pay taxes for sales in Ireland which it wasn't already paying, I'm fine with that. That's not what this sounds like however, when the article mentions that Ireland is going after $40B in "untaxed" profits. Most of that is untaxed in Ireland, but only because most of that was not made in Ireland. Not being taxed twice ≠ "untaxed."

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I'd have to agree with you there. This article doesn't talk about taxing sales in Ireland but only the funneling of Billions of Dollars through Ireland and using a loophole in Ireland's tax law to declare themselves as 'Stateless'.

The second measure to be included in the Finance Bill is a change to Ireland's company residence rules aimed at eliminating mismatches – that can exist between tax treaty partners in certain circumstances – being used to allow companies to be ‘stateless’ in terms of their place of tax residence

Basically they are following the letter of the laws of both countries, though maybe not the spirit of the law.
By controlling the Irish company via the US they are not required to pay taxes to Ireland while at the same time the simple fact that said company physically resides in Ireland means they don't have to pay the US Gov taxes because the money is all earned outside the US; So in reality the proposed changes to Irish tax law won't fix anything and won't effect Apple at all.

A spokesman for the Department of Finance declined to explain the change but denied it was due to U.S. pressure.

He added that companies could still nominate any country they liked as their tax residence, including zero tax jurisdictions such as Bermuda - a provision that tax advisers said was unusual internationally.

The only thing that will change is that Apple will have to declare a tax residency country for the Irish company and eliminates the 'stateless' tax status, but Apple can choose any country they want as the spokesman for the Department of Finance pointed out they can declare a ZERO TAX country such as Bermuda and continue not paying either Ireland or the US anything in taxes. That "Unusual Provision" in Irish tax law that allows companies to declare any other country as its tax residence is the law and unless they change that too then Apple can just keep doing what they have always done and legally not pay Ireland or the US any taxes!!! So don't go around saying Apple should pay their fair share when they are just following the existing tax laws in Ireland, legally Apple is doing nothing wrong and unless the law changes there's nothing anyone or any other country's government can do!!!
So whoopty frickin doo and hooray broken ***** Irish tax law!!!

What makes any of us think that Apple cares what these politicians are doing? Why is this even a story, seeing how it has no impact on getting a 5S sooner, making Apple create a better LockScreen experience, or getting rid of the 5C? Large corporations run the countries we live in. Always have and always will. When you have a few millionaires ever dreaming of being more powerful running the countries, its easy for multi-billion dollar organizations to do manipulate the systems.

One of the most profitable companies on the world (Apple) paid less than 4% in taxes last year and y'all are actually arguing that they pay their share. Talking about misguided. Hell I pay more than that.

One of the most profitable companies on the world (Apple) paid less than 4% in taxes last year and y'all are actually arguing that they pay their share. Talking about misguided. Hell I pay more than that.

4% for you does not equal billions of dollars.

You can't blame Apple for trying - heck, America was founded on the principle of tax evasion, don't forget.

Originally Posted by Shigoroku

The employees of the corporations earn the money they spend it too. Employees pay taxes on their earnings, and they pay taxes when they spend it.

Taxing corporations only drives them away. Then we all lose the money and the jobs.

Every time a new law/bill is passed it has some type loophole buried in it or pig ear. All of these Fortune 500 companies use this loopholes. Nightline did a investigation on this on Google mainly but also included later that all of these companies do this. And all created by congress, because a lot people in congress are either on the boards with these companies or are CEO's of the companies also. To me? This is like double dipping and is total BS!! But yes, they all run their money through about 12-13 country's all ending in Ireland. When Nightline followed the trail, it end at a Google office in Ireland with only about 10 employees. The office only did paperwork though, no tech at all! They estimated about us (US IRS) losing out on about $65 Billion a year in tax revenue because of these LEGALIZED loopholes in our government. That's a lot plus giving the fact that all the rich people only have to pay taxes on 250k each year (Max income cap) even though they make 5-10 Million a year? Again total BS!!!! Our government is losing out on a lot of potential tax income because of greed and power!!

Apple has not broken any laws, that's just apple's finical team doing there job. And a good job they are doing I add. When is the last time you knowingly payed extra taxes that your not obligated to pay? Is it "the right thing to do?" Maybe not but bottom line is they haven't broken any laws that I'm aware of.

As a business owner it's about time. I'm sick of seeing these corporate businesses going around tax free meanwhile small businesses like mine in the US are being screwed. If the taxes weren't so high for big corporations they would come to the US more likely and make more jobs for citizens, instead they tax us the little guys big time.

Apple pays its dues. Apple pays to the IRS what it owes on any amount it makes in the US. AFAIK, Apple pays Ireland what it owes on any amount it makes in Ireland. What is broken is that Apple has to come up with this scheme so that the US doesn't charge Apple for money it makes and keeps in Ireland or anywhere other than the US (though any money made outside the US and brought to the US is certainly taxed).

This just boils down to Irish politicians trying to gain some political capital by "fighting the big bad corporations and making them pay their dues" though in reality not really doing this. As noted by the 2nd article, instead of Apple claiming it has no tax residence (a dumb rule/capability to begin with), Apple will now simply have to claim that it is a tax resident of a tax-free country. As long as it does that, it will rightly avoid unnecessary double taxation of its sales. Irish politicians know that they can't actually make Apple pay taxes on its worldwide (outside of Ireland) profits because Apple would likely rather stop selling altogether in ireland than pay $5B in taxes to Ireland alone.

Now if I'm wrong and it makes Apple pay taxes for sales in Ireland which it wasn't already paying, I'm fine with that. That's not what this sounds like however, when the article mentions that Ireland is going after $40B in "untaxed" profits. Most of that is untaxed in Ireland, but only because most of that was not made in Ireland. Not being taxed twice &ne; "untaxed."

Thank you. The people saying apple should pay more taxes, just because they can, are the same communists that support obamacare. If you were rich, wouldn't you want to keep the wealth? Yes sir, and that concept is called capitalism. Don't moan your own failures, I've said it before and I'll say it again. No one cares.

Look at the history of the economy. The economy has always done best when taxes were higher. Guess y'all skipped that class though. Most of y'all must actually believe in trickle down economics.

This is completely backwards. Higher taxes has time and again proven to be MORE harmful to the economy. Quite simply, when people have less spending money, then less is going into the economy. When businesses have to pay more in taxes, they aren't going to magically just pay their employees more, but rather they will be inclined to cut costs, either by paying out less or cutting jobs, both of which has been going on for some time now. All higher taxes does is put more money in the pockets of the government, and not right back into the economy as some people seem to think.

Higher taxes = employers likely to pay less and/or scale back = less take home money = less money going back into the economy.

Lower taxes = employers are more likely to hire and pay more = more take home money = more money going back into the economy.

This isn't difficult to comprehend; it isn't exactly brain surgery. I really wish people would stop ignoring logic.